Another Stimulus-Backed Green Energy Company Goes Broke

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ECOtality, the San Francisco-based “leader in clean electric transportation technologies” (they make electric car charging stations), filed for Chapter 11 bankruptcy protection Monday after laying off employees last week and repaying $96 million out of a total $115 million in stimulus money awarded by the U.S. Department of Energy in 2009.

Trading in the company’s stock was halted Tuesday morning; a single share of ECOtality stock can currently be had for 23 cents. The bankruptcy filing is pessimistic, noting the “Company’s common stock will have very little or no value given the amount of the Company’s liabilities compared to its assets.”

Under the filing, ECOtality will receive a $1.25 million loan from Nissan, an unsecured creditor, and will continue to operate until its remaining assets have been sold off.

Critics of the cozy relationship between the Administration of President Barack Obama and the green energy sector told The Washington Times ECOtality’s demise is only the latest example of how government has no business putting its thumb on the competitive scales that weigh a company’s viability in the private marketplace.

“Government is terrible at picking winners and losers for a simple reason: Politics always interferes,” energy policy expert William Yeatman, of the Competitive Enterprise Institute, told The Times. “That news is only the latest costly reminder that Energy Department bureaucrats shouldn’t be running a taxpayer-backed investment bank for green energy.”

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Jonathan Read, the company’s former CEO, styled himself as a “political beast.” Read boasted about his political connections, and received bonus payments contingent on ECOtality winning DOE support.

One ECOtality executive blamed the company’s financial troubles on Read, who, the executive said, “offered no leadership and either directly or indirectly […] squandered or pocketed all the government money.”

News of a possibly bankruptcy filing had been swirling since August, so it was only natural that investors were waiting in the wings Tuesday with a class action lawsuit. According to The Wall Street Journal’s MarketWatch site, the suit alleges that the company knew its finances were dire long before disclosing any negative information to investors

Does that mean the U.S. government, which got had on its $115 million deal, can prosecute?

Despite some Congressional criticism and a Labor Department probe into its payroll practices, that’s a moot question. The Obama Administration, which has vetted speculative green energy ventures in doling out the stimulus money, isn’t likely to take an adversarial position against its own failed policies.

Personal Liberty

Ben Bullard

Reconciling the concept of individual sovereignty with conscientious participation in the modern American political process is a continuing preoccupation for staff writer Ben Bullard. A former community newspaper writer, Bullard has closely observed the manner in which well-meaning small-town politicians and policy makers often accept, unthinkingly, their increasingly marginal role in shaping the quality of their own lives, as well as those of the people whom they serve. He argues that American public policy is plagued by inscrutable and corrupt motives on a national scale, a fundamental problem which individuals, families and communities must strive to solve. This, he argues, can be achieved only as Americans rediscover the principal role each citizen plays in enriching the welfare of our Republic.

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  • Alex

    You don’t seem as concerned when government puts its thumb on the scale in favor of Big Oil.

    Big Oil, to which we give billions of our dollars in corporate welfare, has nearly destroyed the planet you live on, dimwit, yet you whine about investing in our future by improving the technology of such eco-friendly energy sources as Wing, the Tide, and the Sun.

    Under dog-eat-dog Capitalism, you dumb people will wait until corporate America can find a way to charge you for the sun that shines and the wind that blows and keep a straight face. You are pathetic and generations to come will both laugh at your stupidity and castigate you for your greed.

    • Alex

      Uhhh…..’Wind’. not ‘Wing’….

      • Chester

        If you use any electricity off the grid, you are already paying for the sun that shines and the wind that blows. So far there are no tidal or wave action generating stations feeding the grid, although they are being developed.

      • independent thinker

        Wind energy is hardy eco-friendly many 10s of thousands of birds are killed by the wind turbines with the majority of those being Eagles and other raptors all of which it is a federal crime to kill. There are also many thousands of bats killed by the turbines.

        • questioneverything

          Eagles and bats, huh? Who told you that? Big Oil? Did they also mention the 10’s of thousands of birds that die in the spill ponds surrounding shale oil sites? How about the thousands of birds killed by domestic cats? Skyscrapers? Semi-trucks?

    • keefer1958

      Oil is what we have right now. When “green” energy is proven it’s ability to replace oil, THEN it will be widely accepted and used. Right now, and for the foreseeable future, oil is the best thing we have.

    • Marie

      Isn’t that what Obama was doing, charging us for the sunshine, and the wind blowing? Where do you think Obama gets the money to invest?

    • Marie

      We don’t give Big Oil that much. Their profits are much lower than Apple and many other companies. Frankly the government taxes gas and oil excessively! Find out how much tax they collect on each gallon of gas we buy. Gas has not been under $3.00 per gallon in 30 months. Lot’s of revenue flowing into the federal budget.

      • Robert Messmer

        You’re right about the government taxing the gas we buy, but I believe what Alex was saying is that Big Oil pays very little tax and receives billions in subsidies. He is wrong in saying that we are not concerned–at least I am. The government should not be subsidising any industry/company including paying farmers to not grow crops.

  • Warrior

    I’m pretty certain, Mr. Read, will be ok. I’m sure he has some good “friends” to see to it. FORWARD!

  • dan

    How sad…gone the way of the Dodo and the Inter-Urban.

  • Alan

    I’m surprized that they paid back as much as they did. The rest probably ended up in the pockets of officials involved in getting them the money.

  • Robbie

    Hundreds or thousands of American companies have been given some sort of financial aid. A few are bound to go broke anyway – difficult to predict. The government acts in good faith hoping to help Americans start or save a business and therefore jobs. If some business man decided to rip off the taxpayers that’s a problem for sure but remember it is folks on the right who are always tumpeting the great American businessman.If a company goes bad after getting help you should go after the business owner. Just saying.